Let’s say you bought a house in Raleigh in October – you decide to get a FHA Loan, and in December you find that you are going to be re-located (with a job promotion I hope) to Austin, Texas. FHA Mortgages have a provision to refund a portion of your mortgage insurance premium! So you haven’t “wasted” all of that upfront money, at least during the first 3 years. We are going to show you how to get your FHA PMI Refund!
First off, we should be clear that FHA doesn’t actually have a charge of “PMI.” It’s Mortgage Insurance and each agency that has a mortgage insurance has a different name for it. SO USDA calls it a Guarantee fee, Conventional loans call it PMI – and the official term for this FHA Mortgage Insurance is MIP… HOWEVER, our customers typically refer to the FHA Mortgage Insurance as PMI – so that’s what we are calling it, “FHA PMI.”
The borrower’s FHA PMI refund is reduced by two percentage points for each month after the initial FHA loan closing date. Take a look at this chart to determine the refund you may receive.
FHA PMI Refund Fast Facts
Here’s a few good things to know about FHA PMI refunds if you are REFINANCING to a new FHA Loan:
When doing an FHA to FHA refinance, your refund will be applied to the upfront mortgage insurance premium on the new loan.
FHA PMI refunds are available for an FHA streamline refinance after the 7-month waiting period required for these loans.
FHA PMI refunds are available for FHA loans opened less than 3 years ago.
Assumed FHA mortgages are not eligible for a FHA PMI refund. You must refinance into another FHA loan to receive a FHA PMI refund. FHA PMI refunds are available only if you have not entered into foreclosure or been seriously delinquent on your payments.
If you are PURCHASING another home – you bought the house in Raleigh last month and you’re now moving to San Antonio, you will apply for your FHA PMI refund directly from FHA. Here’s the Website for determining the amount of the FHA PMI Refund.
How To Find Your FHA Case Number
In order to receive this refund, you will need your FHA Case Number – literally the “account number” assigned to this transaction with FHA.
The FHA Case Number for your FHA mortgage loan may be found from the folks you are making your payment to. It’s also on your Closing Disclosure, your appraisal of the property, your payment statement, or you can call the folks you make your payments to. If you bought your house in NC, the FHA Case number probably starts with a 387: and 9 numbers.
How Much Does FHA PMI Cost?
The FHA (again) doesn’t actually make loans. They Insure the Bank in the event you foreclose. Because of this, they set the Mortgage Insurance rates, and they set the guidelines under which they will insure a loan. I call it default insurance. That FHA PMI premium amount depends on when the FHA case number was requested. Meaning FHA changes their rates on an as needed basis, sometimes as often as 3 times a year. By “as needed” I mean how much money does the FHA Insurance Fund need to keep paying out claims… This amount is calculated as a percentage of the loan amount.
FHA PMI Rates 2017 are lower than they have been for many years. This is possible because the FHA PMI cash that they are saving to give out in the event of defaults is now in “positive” territory. This means for the first time in many years, FHA did not have to request additional funds from Congress.
FHA charges their mortgage insurance in two different forms. The first premium is called Upfront FHA PMI. This premium is currently charged at a rate of 1.75%. Meaning if you borrow $100,000, you will have a FHA PMI fee of 1.75%, or $1750. This rate is set by FHA, so shopping for FHA PMI fees will be the same no matter what lender you go to (so you might as well pick us! 🙂
The Upfront FHA PMI fee of 1.75% can be financed into your loan, or paid in full. If you finance that $100,000 loan, your total loan amount (the loan amount that we calculate for P&I) will be $101,750.
The Upfront FHA PMI is the fee that your refund is coming from.
The Second form of FHA PMI charged on a loan is in the form of monthly premium payments. FHA is not going to refund any of the monthly payments you’ve made into the Insurance Fund. The current FHA PMI rate for the monthly premium is .45% To calculate this, take the total loan amount (our example was $101,750) and multiply that by .45%, then divide that by 12.
Caution About FHA PMI Refund
Beware of people (known as “Tracers”) offering to help you collect your refund for a fee. You do not need to hire someone to collect your money.
You can obtain your refund directly from HUD for free. Check the FHA Website for more information on claiming your FHA PMI (or MIP) Refund, or call them at 1-800-697-6967
How are Refunds Processed?
Your mortgage company notifies HUD of the termination of the FHA mortgage insurance for your loan. If you are eligible for a refund, HUD will either request that the Department of the Treasury (Treasury) issue a check directly to you or send you an Application for Premium Refund or Distributive Share Payment (form HUD-27050-B) so that you can provide HUD with additional information about your case.
It depends on how long it takes your Mortgage Company takes to get the paperwork to HUD for them to realize they owe you a refund.
Because of that, many people initiate the process themselves.
If you receive a form HUD-27050-B, please read and complete the application carefully, sign it, have it notarized, and return it to HUD along with proof that you were the owner of the property at the time that the insurance was terminated.
After HUD receives your completed form HUD-27050-B and the necessary supporting documentation, this information will be carefully reviewed. Upon completion of this review, HUD will either request that Treasury issue a check directly to you or request additional information from you.
If you do not receive a check or an application within 45 days after you have paid off your loan, check with your mortgage company to confirm that they have sent HUD a request to terminate the mortgage insurance on your loan. If they confirm that the correct termination information was sent, contact HUD. If you do not receive a refund or any other documentation from HUD within 120 days after the date you mailed your application, contact HUD immediately.
You can all them at 1-800-697-6967
If You Think You Are Entitled To A FHA PMI Refund
The bottom-line is that shorter the home owner has had the current FHA loan the higher the refund amount. We suggest looking at the HUD website to determine how much you will receive. Because the premiums charged change so often it can be difficult to figure out! Let HUD do the hard work!
This newest FHA PMI cancellation policy applies to FHA loans beginning June 2013, and doesn’t change if you have a 15 year or 30 year mortgage. With loans taken out after that point, FHA PMI will no longer be cancelled, or drop off of your loan if you make less than a 10% down payment. Unless you refinance into a different type of mortgage program, or you pay your mortgage off – the FHA PMI will be on your loan clear through the last payment.
Do you have more questions about how FHA PMI Refund? Are you ready to do a FHA Streamline Refinance? We offer the cheapest mortgage rates available, and we know how the FHA PMI Rates will affect your mortgage payments!! Call Steve Thorne 919 649 5058
If I’m going through a lender and I’m not very happy with their results,I have been under contract with a home for over 3 months going USDA only to be denied by the underwriter for being over the income cap due to overtime acquired by the company being short staffed….this is something they should have known before sending it in to underwriting…if I switch lenders will my score drop and will I loose my earnest money as well as the money spent for an appraisal?
You should not lose your appraisal, if the company you are dealing with will assign the appraisal to another company. You should talk to the Seller about the delay in closing, if you are working with an agent, they should be able to help you. If you are over the household limit for USDA, there’s likely another program that offers down payment assistance that you might be able to qualify for. If you are in NC, we would love to help you, our number is 919 649 5058